Buffer use and lending impact

Marcin Borsuk, Katarzyna Budnik () and Matjaž Volk

Macroprudential Bulletin, 2020, vol. 11

Abstract: This article analyses the role of capital buffers in containing the reduction of lending to the real economy during the COVID-19 crisis. Our results show that banks’ use of capital buffers leads to better economic outcomes, without a negative impact on their resilience. Banks’ willingness to use capital buffers is reflected in higher lending, with positive effects on GDP and lower credit losses, while the resilience of the banking system is not compromised. JEL Classification: G01, G17, C22, C54, G21

Keywords: BEAST model; capital buffers; lending; macro-financial feedback loops; macroprudential policy; macroprudential stress test; systemic risk (search for similar items in EconPapers)
Date: 2020-10
Note: 1355359
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbmbu:2020:0011:2

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